Michael Voegele, Chief Digital Officer (CDIO) at Philip Morris International (PMI), enjoys taking on big leadership challenges – and they are no greater than using technology to help support a significant transformation in the business model of a company that is best known for the manufacture and sale of tobacco and cigarettes.
“I appreciate it,” he says, reflecting on his two and a half years at the head of IT at the company. “I think the decision to join PMI was to turn things around, transform an organization, take on a challenge you can solve, and then leave something behind.”
Famous for its heritage in cigarette manufacturing, PMI is evolving towards the sale of smokeless products which, while not without risk, are designed to create tobacco vapor containing nicotine without burning or smoking. Voegele says this represents a huge change in business model – and technology plays a crucial supporting role.
“This transition is about converting and helping smokers convert to a different reduced risk product,” he says. “I’ve stepped into a role that involves a huge transformation, with a series of challenges, but also with great opportunities to help the business, to change the way we operate and to change the way we deliver IT solutions. “
Voegele became Chief Technology Officer (CTO) of PMI in February 2019. He previously worked for sportswear giant Adidas, which he joined in 2011, in various management positions before becoming CIO in November 2015. During his three years at the head of IT at Adidas, Voegele drove significant technological change throughout the company.
“We changed a lot of things – the way we did our business and the way we worked together in all functions,” he says. “We helped the company enter the omnichannel world and we worked hard to really eliminate multichannel thinking. But then there was the question of “what’s the next big challenge?” “”
“You must participate in the resolution of a problem”
Michael Voegele, Philip Morris International
As he reached the end of 2018, Voegele did not see an immediate opportunity for further transformation at Adidas. The company’s IT was “at a steady state,” he said. So he decided to take a break from IT management and spent time with his family. In February 2019, the opportunity presented itself at PMI and Voegele was impressed.
“At that point, PMI was five or six years into the marketing journey of its reduced risk portfolio,” he says. “I was impressed with the progress the company made over these years: innovating, creating, designing, developing and bringing to market a whole new product, which also basically meant moving from a B2B business to a B2C business.
“It was impressive, but then I had conversations with the CEO and said, ‘where is the trip going? And then when i heard about ambition i said ‘this is the right place if you are looking for a challenge’. And that’s when I joined.
Changing course on technology
Voegele recognizes that the journey he and his colleagues at PMI are taking is to transform a business from the old to the new world. So what does it mean to work for a company whose heritage is all about smoking, but looking to develop a new business model and a smoke-free future?
“You have to participate in solving a problem,” he says. “There was this important step of saying, can we convert and provide solutions to the billion smokers around the world who would otherwise continue to smoke? Can we give them something that is – not without risk, but reduced risk – and, once we are there, how do we continue that journey? “
Voegele’s role is to help transform a tech organization that he said was still being built in a more traditional way. When he spoke to senior executives before joining the company, he discovered that the key IT project on the horizon was the implementation of a global instance of an SAP environment.
He said PMI was planning to spend the north a triple-digit million euros to renovate the back-end infrastructure as part of this initiative. Not only did he think this approach was wrong, he felt that SAP was ill-suited to an organization that was looking to engage much more directly with the people who would purchase its reduced risk products.
“I asked, ‘What is the motivation of an organization that says it is consumer-centric to focus all of its resources on renovating something internally? »What does the consumer get from us if we renovate our ERP? [enterprise resource planning] environment?’ And it was funny because at that moment I said: ‘If you want to continue this project, I will not join you,’ ”he says.
Voegele didn’t want to sign up as a technical lead and then have to conduct a massive ERP overhaul over five years. The board of directors agreed and the project was stopped. Attention then shifted from the back-end to the front-end – and one of those priorities was to make sure the organization was set up to get the most out of the digitally-led business transformation.
“I think everyone has understood that we need to focus on the front-end and the impact on consumers rather than just being busy within our own four walls,” he says.
Offer an integrated approach
Voegele inherited what he calls a bimodal, two-speed approach to IT, in which PMI managed separate digital and IT units. The digital unit was responsible for consumer engagement and marketing activities, and the IT department was responsible for efficiency and maintaining the legacy environment. He took a different and combined approach to IT and digital.
“You have to have an integrated view, which is not an isolated strategy but an integrated part of the business strategy to see how technology is able to accelerate our journey,” he says. “It’s not about old and new technology and separating it, because that just creates more silos and a lot of problems.
“At the end of the day, there has to be a connection between your heritage and your future. You need to create the conditions for your digital business which are also tied to your legacy. So we had to rethink the way we structure ourselves and how we focus; how we invest our resources, but also our money and how we create teams that can really make an impact.
When Voegele looks back on the changes he made to PMI, he says they can be categorized into three distinct elements: cleaning up the company’s 2,600 existing systems; focus on sourcing and developing the technological systems the business needs for the future; and end-to-end ownership of platforms, where the IT team provides integrated capabilities to its business partners.
“I think across all pillars we’ve made significant progress, which I’m really proud of,” says Voegele, who inherited 2,600 business applications when he joined PMI in 2019. His team has already reduced this park by 500 and has plans. to remove 500 others. More than 200 applications, in the meantime, have been moved from the data center to the cloud.
When it comes to developing applications in-house, Voegele has overseen the creation of a team of 80 software engineers integrated across the company. These engineers develop digital capabilities for various industries around the world. Finally, the integrated approach to IT development has placed technology at the heart of the business.
“We don’t start conversations about technology,” he says. “Instead, we start by thinking about what we’re trying to solve from a business challenge or consumer issue perspective before we actually engage in a tech conversation – and that’s a big change. and positive change. “
Create local solutions to global challenges
Voegele says this three-pronged transformation effort has helped shift perceptions of technology across the company. In March of this year, he took on his current title of CDIO, reflecting the fact that technology leaders must first and foremost be business leaders.
If you want to drive the digital transformation as a technical leader, you have to be an equal partner, says Voegele – and despite his team’s accomplishments so far, there is still a long way to go. “I wouldn’t say we’re done. I think we still have a great journey ahead of us, ”he said.
“If you look at our most important component, when we look at our consumer engagement platform, we are still in the deployment phase to make it a global platform. So by the end of this year, we’ll have our consumer engagement suite rolled out in 20 markets around the world, potentially covering 60% of our current consumers. “
Voegele says some of its main challenges involve the continued development of an omnichannel shopping experience, where PMI must, from a regulatory perspective, consider how it conducts its transactions online and how it interacts with customers around the world. whole.
“There is a different regulatory environment in each region,” he says. “In some markets you can do outreach online; in some markets you can conduct e-commerce transactions online; in some markets you can do some type of marketing and others you cannot.
“So I think the fundamental difference that I can compare us to my former employer is that you have to be very disciplined when it comes to understanding the regulatory environment and designing the solutions, so that in every market in whichever you get started, you comply with the regulatory guidelines at your disposal.
Voegele recognizes that any business platform must evolve in response to the changing consumer demands that the rest of the business sees. He also suggests that one of the biggest challenges for the IT team is having both a global perspective and approach, while being quick and innovative locally. This is another challenge that he will seek to overcome.
“The marketplace is where we interact very closely with the consumer,” he says. “But we want to have global platforms that allow us to create consistent brands and experiences on a global scale. Therefore, finding that balance between creating a basic platform capable of supporting innovation upstream from the home – and creating those capabilities for market-by-market differentiation based on local consumer preferences – is a big deal. challenge. ”